Ahmed Moustafa: Attacks on ARAMCO
Saudi Arabia’s state-owned company Aramco is the world’s biggest oil producer, generating 10% of the world’s oil, but it is also one of the world’s most profitable businesses.
For a drone attack to have knocked half of its – and 5% of the world’s – oil supply offline, speaks to the vulnerability of their plants and in turn to the vulnerability of a vital part of the global energy infrastructure.
The Khurais oilfield produces about 1% of the world’s oil, and Abqaiq is the company’s largest facility – with the capacity to process 7% of the global supply.
Questions being asked centre on: Why this attack could not have been prevented by a company with such deep pockets? And whether it can happen again?
A barrel of crude oil cost $60 (£48) on Friday and some analysts believe that could spike up to $80 (£64) or more – a knee-jerk response from traders to the shock attacks and to the many unknowns still surrounding the scale of the damage.
Even if this were to happen, prices at the petrol pump wouldn’t be guaranteed to rise by the same rate, however.
When oil trading starts in Asia later on Monday (00:00 GMT), we’ll get our first indication of how markets have digested the scale of the damage and how prices have been affected. Whereas almost three quarters of Aramco’s oil goes to Asia.
Previous events of a similar nature in recent times, however, have not had a long-term effect on the oil price.
As international energy policy expert Professor Nick Butler explains, “the direct impact of the attacks could be short-lived. The market has adjusted without blinking over the last two years to the loss for political reasons of over two millions barrels a day of production from Venezuela and Iran”.
The worry is, if the attacks stoke broader tensions in the region, then these price rises could be more long-term.
Professor Butler believes: “if retaliation becomes a reality, any spike could be sustained feeding the risk of an economic recession”.
For Helima Croft, Global Head of Commodity Strategy at the Royal Bank of Canada, these drone attacks are “a game changer in the escalating Iranian regional stand-off”.
Production facilities, trading routes and pipelines which thread through the region could all be vulnerable to future attacks.
It is far too early to tell whether consumers will see any financial impact from a rising oil price.
In the short term, much depends on how long a spike lasts – and any rise would take weeks to feed through into petrol prices.
For now, investors are closely watching for more statements from Aramco and for any political reaction to events.
In the UK, 40% of the price of a liter of petrol is made up of oil, fuel production and profit. The rest is tax. Analysts they do not expect to see a significant rise in prices at the pumps for drivers.
“There are currently savings in the wholesale price that have only just started to be passed on to drivers by retailers,” says industry expert Simon Williams from automotive services company RAC Limited.
“Many retailers cut their prices by three pence on Friday and we believe that average prices were six pence too high before that, so the impact of these fires may not be too great.”
But after this interesting presentation and analysis by the BBC about the incident and its effects – we have some important questions:
Why are important sites like Aramco not secured, not even by an ally and the US military, whose bases fill the Gulf? Why has the United States been so reluctant to protect a strategic institution like Aramco? Isn’t that suspicious? Has America sold the Saudis after all the Saudi and Emirati spending on arms, logistics and intelligence cooperation with the US and Britain?
There is also controversy, especially after reviewing special reports provides that the price of oil ($ 60) was not suitable for Saudi Arabia, especially after spending and involvement in sabotaging the Arab peaceful revolutions and supporting terrorism and the war on terror, and then enter the quagmire of Syria and then Yemen, which brought it to ruin them and the UAE – were these drones left to hit these sites to raise the price of oil to the level ($ 80) appropriate for the Saudi balance – as happened in the oil tankers that were exposed in the Gulf in May and July recently to raise the price of oil – and then the matter ended on nothing.
In connection with the previous point, and after the lies of the US Secretary of State Pompeo, that Iran is the reason and that it used drones passing through Iraqi territory to hit these oil sites of Aramco – whereas Iraq has denied the use of its territory for the passage of any drones, can the Houthis not to get accurate drones from several countries like the black market even from the United States indirectly, because we do not know the nationality of these marches yet – are they homemade or imported from another country?
Is it not the right of the Yemeni people to determine their own destiny and defend themselves after being subjected to many violations by the Saudi and Emirati regimes under international and human rights reports? As a result of violations against historical, cultural and archaeological sites registered by UNESCO – and also violations included schools, children, hospitals, women and the elderly, to support illegitimate regime of its resigned president who is a member of the hawks Brotherhood, and according to the testimony of “Ali Abdullah Saleh,” the former Yemeni president on Russia today for a full hour from Moscow in 2015 – Why double standards against the Yemeni people?!!
All we want now is not to be distracted by Netanyahu’s plan to seize Palestinian land, if he wins legislative elections the Zionist entity and to unite to protect the rights of our brothers in occupied Palestine, and finally to put an end to these Israeli violations that always cause headaches in the region.
Please be guided accordingly.
Director of Asia Center for Studies and Translation
Member of CODESRIA and Group of Strategic Vision Russia and Islamic World